Land troubles plague Dasu hydropower project

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The next six months are crucial for the 2,160MW Dasu Hydropower plant as the acquisition of land close to the site area has not yet been finalised for the project, highly placed project sources confirmed.

Sources told Pakistan Today that further expansion of main works is currently being limited by delays in land acquisition for the construction area.

The Water and Power Development Authority’s (WAPDA) documents available with Pakistan Today mention that 18,357 acres of private land is to be purchased while 19,062 acres of government land is to be transferred free of cost for the project. Documents mention the inability of resolving petty issues within 25 months as one of its top priority – Dasu Hydropower Project (DHPP), has landed WAPDA  into frustration as it has not been able to acquire required land before the World Bank deadline.

The documents indicate that the situation ended up in a mess as the primary condition of implementing $266.5 million Social and Environmental Management Plans, a critical component for the timely completion of the project’s first phase could not be implemented until the review by October 31 in 2016 of $4.5 billion loan agreements that were approved in November 2014, sources told Pakistan Today, adding that the acquisition of about 37,419 acres was a basic component of the World Bank financing before going into the review.

The Dasu Dam documents also contain a letter from the World Bank seeking the then finance minister Ishaq Dar’s intervention to resolve the issues. Whereas the Khyber Pakhtunkhwa (KP) government stayed on its claim of charging 2.5 per cent as service charges for the land acquisition, which was unprecedented, also made things worse. However, the KP government pulled out of its claim later on.

Additionally, the documents mention that the KP government’s failure in ceasing illegal construction on the marked land from the locals further aggravated problems in price negotiations which would go beyond Rs10 billion.

Besides, the federal government also took more than 15 months to finalise property rates for acquiring project land. Whereas, the documents mention that there would be a loss of Rs8,375 million in 25 months for the delays and KP faced losses of Rs925 million for this barrier.

Sources said that was the first attempt by the World Bank to finance a large infrastructure project on a sequential basis through a combination of credits and guarantees to mobilise the full financing over the construction period. They said that the credit was financed from the International Development Association (IDA), the World Bank Group’s grant and low-interest arm.

Project documents revealed that the cost of land acquisition has been reduced from Rs17 billion to Rs12 billion. However the cost of other components has gone up. The cost of relocation has been increased to Rs13.5 billion from Rs12 billion. The internal roads will be completed at an inflated cost of Rs10.5 billion. The cost of the main dam is approved at Rs101 billion while an underground powerhouse will cost Rs60 billion

On the other hand, sources said that negotiations on $800 million components took 25 months with foreign creditors and another $1.4 billion with domestic commercial banks, which was fully funded by the World Bank (WB).

Project documents indicate that the WB has affirmed the extention of guarantees for obtaining $1.9 billion in commercial loans. In addition to this, it also plans to approve another loan of $533.4 million for the project by the next year provided that the scheme advances as per schedule.

A WAPDA spokesperson claimed that the consensus was developed after two months of continuous negotiations.